What the NEB did and didn't do in its assessment of Trans Mountain, and how it can fix the problems

The ruling raises questions about the scope of environmental assessments, which some argue has become too broad. Others say the decision proves the NEB should never have been made responsible

Maura Forrest

Updated: August 31, 2018

A aerial view of Kinder Morgan's Trans Mountain marine terminal, in Burnaby, B.C., is shown on Tuesday, May 29, 2018. The National Energy Board has ordered construction on the Trans Mountain pipeline to stop, a day after the Federal Court of Appeal quashed the approval of the project and nullified the NEB certificate.Jonathan Hayward / The Canadian Press

OTTAWA — This week’s Federal Court of Appeal decision that quashed the government’s approval of the Trans Mountain pipeline expansion has raised questions about the scope of environmental assessments and the role of the National Energy Board in evaluating the impacts of major projects.

Thursday’s decision found the NEB should have considered the impacts of increased tanker traffic, particularly on endangered Southern resident killer whales, as part of its assessment. The ruling also found the government would have to redo the final part of its consultation with Indigenous peoples.

In the wake of the decision, some experts argue that environmental assessments in Canada have become too broad, creating uncertainty for resource companies and investors. Others claim the decision proves the NEB should never have been made responsible for environmental assessments, and the Trudeau government was right to remove assessments from the regulator’s purview with its coming overhaul of environmental assessment legislation.

Here are some key details about the NEB’s mandate, where the court decided the board went wrong, and what may happen next.

What is the NEB’s mandate?

Established in 1959, the NEB is a quasi-judicial independent body responsible for regulating the construction and operation of interprovincial and international oil and gas pipelines and power lines. But its exact mandate has shifted in recent years. Traditionally, the NEB has issued public interest certificates for major projects, but when the Harper government overhauled Canada’s environmental assessment legislation (CEAA) in 2012, the NEB was also given authority for those assessments. The NEB therefore evaluated the Trans Mountain project under both the NEB Act and CEAA 2012.

“The case really deals with this very narrow period of time in which some fairly radical changes were made to the law,” said Jessica Clogg, executive director and senior counsel with West Coast Environmental Law.

The factors the NEB includes in its environmental assessments can vary from project to project. The board says it generally considers only “physical works and activities directly related to the proposed project,” but that isn’t always the case. Last year, the board made headlines when it announced it would consider upstream and downstream greenhouse gas emissions in hearings for the now-defunct Energy East pipeline project, which the oil industry saw as a major setback.

Richard Masson, executive fellow at the University of Calgary’s school of public policy, said the NEB used to have a clearer mandate just to consider the direct impacts of a pipeline, but that has now broadened.

“It’s like quicksand, right?” he said. “It starts to undermine how you define the scope of a project properly.”

Why didn’t the NEB look at tanker traffic?

The NEB didn’t include marine shipping as part of its environmental assessment because the board “does not have regulatory oversight of marine vessel traffic,” according to its May 2016 report on the project. However, the board did look at the impacts of increased marine shipping as part of its public interest recommendation under the NEB Act, and determined it would likely “result in significant adverse effects to the Southern resident killer whale,” according to the appeal court ruling.

The court found the NEB was only able to conclude that the project wouldn’t cause significant environmental harm because it had excluded marine shipping from the environmental assessment. “It was in doing that part of their work that they ran into trouble,” Clogg said. “It was outrageous to exclude it from the environmental assessment.”

According to the court ruling, “the board’s process and findings were so flawed” that the government “could not reasonably rely on the board’s report.”

How long could it take for this to be resolved?

Whether the government will appeal the ruling to the Supreme Court of Canada remains an open question. Alastair Lucas, a law professor and director of the sustainable energy development program at appeal court was very precise in its reasons for overturning the approval. But he suspects the government may try it anyway.

“This is in the realm of strategy. I think you probably do appeal,” he said. “But I also think you immediately set out to try to fix this.”

Experts also disagree about how long it would take to redo consultations and assess the impacts from marine shipping. Masson said he thinks the work could be completed in as little as six months to a year, though he called that a “best-case scenario.”

But Clogg suggested a much longer timeline, in part because the government would have to work out the structure of consultations with Indigenous groups. “It’s certainly not a few months,” she said. “I would say we’re looking at a couple of years, minimum. … I don’t think it’s a simple exercise.”

What about the new environmental assessment law?

Bill C-69, the Trudeau government’s new environmental assessment legislation currently working its way through Parliament, throws another layer of uncertainty into the mix. It’s unclear whether the new assessment would be carried out under the existing rules or the new legislation.

“You can carry on… under the existing legislation, but if you’re still in the process of that when the new legislation gets passed, that could create an interesting political situation,” Masson said, suggesting it would be difficult to sell the public on a project approved using outdated rules. “It’s a muddy set of waters, I think.”

Bill C-69 would replace the National Energy Board with a new agency, the Canadian Energy Regulator (CER). The regulator will continue to oversee pipelines and power lines, but will lose its responsibility for environmental assessments. Instead, the new Impact Assessment Agency of Canada, to replace the Canadian Environmental Assessment Agency, will lead all major assessments.

Clogg said it would be a “very, very good thing” for the government to wait until the new regime is in place to fix the problems with Trans Mountain assessment. “I would say that (the scope of assessment) was inappropriately narrowed in 2012… in a way that was designed to push through development projects. And it backfired,” she said. “And I think that lesson’s been learned.”

Lucas said an early planning phase that will be part of the new assessment process should help clarify what factors must be included in future environmental assessments.

But Masson said the new legislation will only exacerbate existing uncertainty by adding in new requirements for gender-based analyses of major projects, among other things. “I don’t think it’s going to help solve these issues,” he said. After what’s happened with Trans Mountain, he added, “I can’t imagine anybody wanting to do this again.”

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